FREE SHIPPING ON SPORTS CARD ORDERS OVER $50!!!!
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FREE SHIPPING ON SPORTS CARD ORDERS OVER $50!!!! |
opening a new storeRevised: 8/19/02 I often receive questions related to opening a new sports card store. These questions range from "how can I sell my cards on eBay" to "how do I open a new retail store". Most of these questions come from serious collectors who are entertaining the idea of turning their hobby into a full-scale business. I personally enjoy helping anyone who is interested in getting into this hobby, whether it's a new collector or a new store owner. With this in mind, the following tips are intended to do just that, help or assist someone in opening a new sports card business or retail store. I've covered several scenarios in hopes of helping you decide which option is best for you. |
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I've broken down my comments into several categories for the reader's convenience. Just select a topic from the links below:
Basic Assumptions Also, please understand that I am not trying to give you financial advice. How much money to invest and where it comes from are questions that you must answer for yourself. Every good business consultant says that all start-up businesses should develop a business plan before taking the leap. A good business plan will help you answer these questions and help keep you on the base paths (a little baseball humor). If you need help answering these questions, contact a professional in the financial or business community.
Expectations The most important point I would like to make here is that you shouldn't get into this business because you think it's a sure-fire get rich opportunity. Some people do make it big, but many people fail. Plan on having another means of supporting yourself at least in the early years so that you can reinvest your profits back into your store and fuel it's growth.
Licenses - Regulations You'll probably need to apply for a "Retail Sales Tax Certificate". This gives you the authority to collect sales tax and exempts you from paying sales tax on merchandise you will be reselling in your store. Many cities, towns and counties also require that you obtain a business license or simply register with their agencies. Be sure to satisfy these obligations before getting too far into the process. One concern that should also be reviewed is the zoning ordinances in your community. Some communities prohibit certain types of businesses in certain areas. Check with your local municipalities for approval.
Type of Store
I'll try and give a few tips and suggestions for each of these different classifications. Many dealers successfully operate across more than one of these classifications, but my suggestion would be to start in only one area. As you gain experience and your business grows, you can then expand into another area at your own pace.
Internet Auction Dealer Before you get started as an Auction Dealer, you'll need to own or have access to a PC and of course some merchandise to sell. That's it!! Anyone that has an item to sell and access to a PC can post the item on an auction site for sale. Even if you've never used these sites before, specific instructions are provided showing you how you can get started. Keep in mind that the auction sites do charge various fees based on the services you elect to use (how else would they make a profit?). Some sites charge a fee to list your item whether it sells or not and some sites only charge you if the item sells. It is also common to pay a small fee based on the selling price of your item. The benefits of becoming an Auction Dealer are easy to see. It's quick and easy to get started and you determine your the level of commitment you wish to make to the business. You can work 2 hours a week or decide to work 40 hours a week. Either way, you control your commitment. The drawback of this type of business is the market itself. I view the auction sites as a buyer's market. What I mean by that is the people shopping these sites are expecting a bargain. This may mean that your items may sell for a price to low for you to make a profit. With experience by trail and error, you should be able to learn which items bring the best returns and concentrate on listing only similar products. Another negative of this type of business is honesty or trust. While most customers are honest and sincere, it is not uncommon for buyers to fail to send their payment or have sellers fail to send you the item that you had won and subsequently paid for. The auction services do provide a feedback rating system that will help you weed out unscrupulous buyers & sellers. In a nutshell, this is the best type of business to start if you have limited financial resources and what totally flexible working hours.
Show Dealer Before you take the dive and become a Show Dealer, you'll need to organize your inventory. Reason being that not only will you need to carry all of your inventory to the location of the show, but you'll need to display the cards in some order once you get there. Being organized upfront saves you time and headaches when the day of the show actually arrives. It may pay to invest in a few tabletop showcases to display you cards. Not only will these cases make your table look professional but they will help deter theft. The benefits of being a Show Dealer are similar to being an Auction Dealer. There is very little upfront investment needed and you get to work as little or as hard as you want. The drawbacks include poor show turnouts which of course will usually equate to lower sales for you and the lack of local and regional shows. With the growth of the Internet, the number of shows appears to have tapered off. You can view a schedule of current shows at the Beckett.com site as well as other sports card hobby web sites. One last comment about sports card shows, they also have a tendency to be a buyer's market. Prices tend to drift lower on the days when the crowds at the show are small and competition is fierce. Overall, selling at shows can be the perfect way to get into the sports card business. If shows are still common in your immediate area, this may be the perfect choice. For the record, our store does not sell at many card shows so we should not be viewed as experts on this topic.
Internet Dealer An Internet Dealer needs a web site before he can open shop. There is really only 4 options here. First, you can create or pay someone to create a web site that is e-commerce enabled. This is an expensive option and unless you are advancing from an existing well-established store, probably too expensive to consider. Besides, it probably doesn't make sense as I'll explain later. I had estimates that ranged from $10,000 to $35,000 to have a site built for our store. Secondly, you can create a web site using one of the many turn-key systems that are available on the web today. These turn-key systems do most of the work for you for a monthly fee ($25 - $1000) and you then use their system to add your inventory. Even with these type of systems, there's no guarantee that a single customer will visit your site yet alone buy something. A few of the top turn-key system providers are Yahoo, Free-Merchant and Big Step. The third option is to create or have someone build a web site for you without e-commerce capabilities. With this option, you'll will have to handle all payments off-site or by using a third parties payment service such as PayPal. This option puts an additional burden and more headaches on the store owner but is very cost effective. I estimate that you can get a web site created by a local developer for as little as $250. Of course this will be a very basic site, but it may satisfy your needs in the early stages. Fees associated with either of the first three options include domain name registration ($25-$50 annually), site hosting fees ($5-$50 monthly) and possibly credit card transaction fees. OK, now for option number four. I have no doubt that after you read this you will agree with me that if you decide to sell sports cards via the Internet that this is the only option that makes any sense. I'm talking about joining the Beckett.com Dealer Marketplace. Let me first explain what Beckett.com does, first from a general perspective. Beckett.com is a subsidiary of the Beckett Inc., one the most respected names in the sports collectible industry. As most of you probably already know, their primary business is publishing price guides for the industry. The folks at Beckett launched a web site to serve their customers by selling their services and products conveniently on-line. Today, they have been successful in attracting over 10,000,000 monthly page hits to their site. A very important factor to remember here is that the millions of people visiting the Beckett.com site each month are nearly all trading card collectors, dealers or hobby enthusiasts. Anybody with any marketing experience will read that last sentence and realize how important that can be to a sports card dealer. OK, here's the best part, Beckett.com has developed a section on their web site to allow sports card & collectible dealers to list their own cards and related items for sale. Simply put, they have built a web site that does most of the web development work for you, drives millions of customers to the site (something you would never be able to pay for on your own), handles the payment transaction for you and then mails you a check. Folks, this system was created for sports card dealers with input from sports card dealers. It is improving constantly and the future possibilities are endless. To make matters more attractive, the Beckett.com Dealer Marketplace also provides tools for the dealer to upload their inventory which includes a complete checklist of every card in the Beckett database with current pricing. And just to add icing to the cake, your prices are automatically updated with each new Beckett price guide. My words can't explain the power of these tools. Add features such as automatic order notification, printable invoices, shipping options, and easy inventory maintenance and you have a system that you simply could not afford to develop on your own. By the way, did I say that the buyer pays all shipping fees based on the shipping options you select? Another huge advantage of the Beckett.com site is the selling prices. On the auction sites, cards sell for pennies on a dollar because of the low price auction mentality. If a card is priced fairly on the Beckett site, it will eventually sell. You can list cards this month and not have to worry about them until the card sells, even if it's a year from now. By the way, there is no limit to the number of cards you can post (as of this writing, we have nearly 175,000 cards posted for sale). I know I probably sound like a commercial here, but I really believe in this system. The fact of the matter is this system is 10 times better than the system I was considering paying $35,000 to have built for us. OK, how much does it cost? Beckett charges dealers a $100 hosting fee, a 5% (drops with the size of the order) commission on each sale, and a credit card processing fee of 2.5%. You really can't count the credit card fee as a Beckett charge since you would have to pay a similar fee with any site. For the record, the payment for a 10-year loan for $35,000 is over $400 a month. The problem with this option is the technology is out-dated 6 months after your purchase and you haven't attracted 1 customer to your site yet. What can you expect in terms of sales? This is solely dependant on what cards you have for sale and how hard you work. Obviously if you list 1991 Score football your sales will be lower than if you listed 100 game-used cards. I would recommend surfing a few of the top dealers sites to see what they have listed and how they are pricing their cards. This can give you a wealth of information on what and how to list. I do caution that the lowest price cards do not always sell first or best. Beckett.com customers are looking for a reputable store and positive shopping experience. Unlike an auction buyer, price is not always their number one priority. With the Beckett.com site, you do not need a stand alone web site. Beckett provides all you need to begin setting up shop for the base hosting fee. To give you a feel for what Beckett provides a dealer, check out the Cheap Seats Sports Cards Beckett.com Storefront. If you get ambitious down the road, you can develop your own stand alone web site that uses the Beckett.com site to handle all sales transactions. This is what we do. You can see how our web site is set up by clicking on the "Shop Now" links from the Cheap Seats Sports Cards home page. Conclusion, if you really want to start selling cards on the Internet, there is really only 2 realistic options - auction sites or Beckett.com. In my opinion selling on the auction sites is like driving a Yugo when you have a Mercedes in the garage. This is the best kept secret in the sports card industry and the Beckett site is just getting better. If you have questions and wish to talk with a Beckett.com representative, drop Shawn an email at: mpadmin@beckett.com. Retail Storefront When you make the decision to open a retail store, one of the first decisions you'll need to make is finding a location, or more specifically an available location. Everyone would like to be on the corner of the busiest intersection in town, but reality says that this is not always possible. Research all available options by searching the classified ads, contacting the local Chamber of Commerce or business associations. Select the space/building with the best location for the price you can afford. One tip - paying a slightly higher price for an excellent location now, may pay huge dividends for your business later. After you have your location selected, I recommend that you focus on one very key element to success - customer satisfaction. Why am I talking about customer satisfaction before you even opened shop? It's simple, from the moment you begin organizing your retail store, you'll be making decisions that will affect your customers. Do I paint the walls or don't I? Do I add new lighting or don't I? Do I provide a place for my customers to sit or don't I? You get the picture. As I mentioned in the opening paragraph, the most successful dealers always have one common factor, they're good at making their customers feel good. So here's my tip - make your store a place where customers want to come and shop. Make sure it is clean, organized, well lit and customer friendly. Also, keep consistent hours and be there when you say you will. There is nothing more frustrating to a customer who shows up when you are supposed to be open and you're actually closed. I almost forgot, institute a "no smoking" policy from day one. Keep this statement in mind - If a customer has a positive experience in your store, they will tell 3-4 other people about it, if a customer has a negative experience in your store, they will tell 10-12 other people about it. You make the choice. Don't forget to get the necessary permits or licenses. You'll probably need to apply for a "Retail Sales Tax Certificate". This gives you the authority to collect sales tax and exempts you from paying sales tax on merchandise you will be reselling in your store. Many cities, towns and counties require that you obtain a business license or simply register with their agencies. Be sure to satisfy these obligations before getting too far into the process. One concern that should also be reviewed is the zoning ordinances in your community. Some communities prohibit certain types of businesses in certain areas. Check with your local municipalities for approval. Before you can open shop, you'll need to acquire the necessary inventory. You'll probably have a nice selection of single cards but you'll need a source for new card products and hobby supplies. If you don't, I do have a few tips on acquiring single cards in the "Where to purchase cards" section of this page. I recommend starting by contacting each of the card manufacturers and several distributors. The manufacturers will send you applications to open a direct account and the distributors will send you catalogs and price sheets for the products they carry. You can find a list of the card companies with their contact information by clicking here - Trading Card Manufacturers. You can contact each of them to see what their specific terms are of opening an account. When selecting a distributor, it's probably wise to concentrate on distributors located in your store's vicinity. They don't have to be in the same city or state, but somewhere in a 5-6 state region is probably best. My reasoning is that in most cases, you'll be paying the shipping charges and closer is cheaper. Now since we are in the Chicagoland area (Northwest Indiana), I can give you the names of a few distributors who we have developed good working relationships with. This is not intended to be an all-inclusive list, just a few names that we feel comfortable recommending. All 3 of them have routes where they deliver directly to your door. This of course assumes that your store is located in the area where they are currently delivering. Here they are:
For more information on distributors, contact Card Trade Magazine. I discuss Card Trade Magazine in greater detail in the "Resources for Sports Card Dealers" section of this page. One word of caution when purchasing new wax/foil product. Buy only what you know you can sell. Why? Several reasons. First it's good business, no business should buy product that they can't sell within a reasonable time frame. Secondly, it's easy to restock. A good distributor will gladly fill your orders when you sold out. It may cost you a few extra bucks and you may miss out on a hot product or two, but trust me, it's better than having a whole lot of product on your shelves that isn't selling. It's probably worth mentioning dealer pre-orders here. Our distributors will take pre-orders on products in advance of their release at very attractive prices. When pre-ordering, you can order smaller quantities and you are not billed until the product is delivered. For small start-up shops, this is a fantastic benefit and you should take advantage of it. In my opinion, most store's that fail, fail because they bought wax product that they couldn't sell. Buying product that sits on your shelves is tying up cash that you could be using somewhere else (or paying your bills). OK, now you have product, now what? Well it's time to open your doors. Please, don't forget about what I said about customer satisfaction. It's extremely difficult to get new customers into your store, so keeping the customers you have is very important. You do this by making their visit an enjoyable one. Here are a few comments on employees. When the time comes that you need additional help to run your business, here are some options to consider. High school kids (maybe one of your customers) are a good low cost option for part-time workers. Put up a sign in your shop and you'll have a steady stream of applicants applying for the job. Don't forget to consider relatives. Assuming you can trust your own family, this is usually a very safe bet. Also, don't overlook retired customers or neighbors. Very often older folks are begging for something to do and can be very productive employees. Regardless of whom you hire, be sure you set clear expectations and outline their responsibilities for them. They won't have the same level of expertise that you have to begin with and you'll need to understand that up front. I don't claim to be an advertising expert but I do have a few quick tips regarding the topic. If you can, spend a day developing a marketing plan. This doesn't have to be fancy, just a couple of pages outlining your marketing strategy. There are good books, web sites and PC software that can steer you in the right direction if you are interested. Whichever method you choose, be sure to determine who and where your customers are, how much money you can afford to spend and when can you spend it. The best marketing advice I can give you is to invest money upfront in your store's appearance and make your customers visit a pleasant one. If you do this, you'll get return customers and they'll spread the word about your store for you. Good low priced advertising opportunities include; sponsoring a Little League team or donating to the Little League (kids, kids, and more kids), in-store flyers, local school event or sports programs and donations of merchandise to community organizations for their functions or events. Don't forget about the "Yellow Page" advertising. This can be expensive if you get listed in several different area phone books, but it can direct many new customers to your store with no extra work on your part. Pricing your merchandise properly is an important part of being successful in any business. If your product is priced to low, you may loose money. If it is priced to high, you may loose sales. Rather than give you specifics about our pricing strategy, I'll offer some generalities. Most of the manufacturers determine a SRP (suggested retail price) for each product. Don't price your products below the SRP. If anything, you may be forced to raise the pricing slightly above this level. This typically applies to new packs only. Box pricing is an art in itself. Obviously, the box price should be lower than the price of buying the same quantity of packs. A good rule of thumb is to price a box of 24 packs at the price of 18-20 packs of the same product. Pricing single cards is also an art. We use the Beckett price guides and discount a percentage off of the high guide price. This strategy works for us in our market. Your market may allow you to charge high guide for certain cards and half guide for others. This is something you'll need to determine for yourself. Start by seeing what your competition is doing. Your competition doesn't necessarily have to be another store, but it may be a local card show or it may be the Internet. Either way, it is easy for you to find out your competitor's prices. It is not uncommon for card collecting supply prices to be "keystoned". Keystoning is pricing your products at double the cost of the product. At first you may think this is too high, but take a look at the situation for a second. Most hobby supplies must be purchased in case lots to get case pricing. The lower case pricing now allows you to provide a good product at a fair price to your customer. Keystoning these types of product will allow you make a fair profit. I can go on and on about the lessons we learned in our store but will cut it off here for now. I will occasionally update this section as questions arise or upon request. If you are indeed looking at opening any type of sports card store, please check out the Resources for Sports Card Dealers section on this page. These few contacts are the best resources in the industry today and are more than willing to help you.
Where to Buy Cards There is plenty of opportunities to buy cards at card shows. Some dealers set up at shows and do nothing but buy, buy and buy some more from the customers. You can also shop yard sales, garage sales, flea markets, estate sales, etc. These types of sales occasionally yield a nice find at bargain prices. But, by far the best place to purchase cards is from your customers themselves. If you have a retail store, you have an added vantage over other dealers for this reason alone. Storefronts will usually have a steady stream of collectors wanting to sell their cards. Keep this fact in mind, if a collector can't sell his collectibles, the hobby suffers. With this in mind, sports card stores need to buy some cards back from their customers. You don't have to buy from every customer or everything that walks in your door. If you can't afford to buy it now, offer to trade. You can complete a trade with many of your customers that is beneficial to each of you. It's not really important on how you do it, it's just important that you do it. What we do at our store is create a "Want List" or "Buying List". When people call and ask if we are buying we always respond with "absolutely" and show them our "Want List". Our "Want List" features the players or cards we are looking for and the prices we are currently paying. We found this to be a very effective way to buy the cards you really need while discouraging the customers who are trying to sell junk. How much do you pay?? I'll tell you what we do. On higher ticket individual cards, we pay 35-40% of high Beckett pricing if one of our customers is selling. We pay 15-40% from people who I never saw before and somehow located our store. Depending on the player or set, I may adjust the prices up or down according to how the market is at the time. In other words, I'm currently paying 40%+ for Alfonso Soriano cards (he's hot) while I may only be willing to offer 15-20% for Ricky Williams cards (he's not selling). When buying in bulk or entire collections, I quickly scan the collection for key cards and make a fair offer based on the key cards. There is no exact system or rules to follow when buying cards. Expect to acquire bulk unsorted collections for much lower prices since you will need to invest the labor to sort them. A very good guide on what to pay can be found on the world's top sports card dealer web site. Burbank Sportscards actually has a massive buying list with current buy prices posted on his web site. You can find it at: http://www.beckett.com/burbanksportscards/we_buy.asp.
Keys to success? Maintain a clean, well lit, smoke-free, organized operation Another important factor is you'll need to know your stuff. Customers want someone who'll have answers for them or be able to steer them in the right direction. Buy all of the Beckett or Krause Publication annual price guides. These guides cost $20-$30 each but you can't run a sports card business properly without them. These guides give you the knowledge needed to answer the customer's questions. Visit as many other hobby stores as possible. You'll quickly pick up great ideas to implement and quickly learn what mistakes to avoid. It's amazing how a mistake you may be making in your own store isn't readily apparent until you see the same mistake in someone else's store. My wife and I have visited literally 100's of stores across the country. Seldom do we walk out of a store without picking up a new idea.
Great Dealer
Resources
I hope this gives you something to start with?? Let me know if I can be of
any help down the road. You can contact me at: joe@cheapseatscards.com.
Good luck!! |
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